Berkshire Hathaway has reported a record cash reserve of $397 billion in the first quarter of 2026, as the conglomerate's operating earnings rose 18% to $11.35 billion from $9.64 billion a year earlier. The company's revenue came in at $93.7 billion, beating the $89.3 billion estimate, while net income reached $10.1 billion, missing the $11.8 billion forecast. These are the first results under new Chief Executive Officer Greg Abel.
The massive cash pile, driven by a total of $8.1 billion in net equity sales, has reignited debate about market timing, as valuations in US stock markets reach historical highs. The S&P 500's price-to-earnings (P/E) ratio has risen to approximately 24, well above the long-term average of around 16, while the Shiller P/E ratio has surpassed 37, approaching levels not seen since the dot-com bubble.
Warren Buffett, the legendary investor who led the company for many years, has historically described cash as a “necessary but not ideal” asset, likening it to oxygen for businesses and a “war reserve” waiting until attractive opportunities arise. The current strategy suggests that with market valuations elevated and suitable investment opportunities limited, the company prefers to hold onto cash rather than make aggressive purchases.
According to experts, the current rally is based on optimistic assumptions such as AI-powered profit growth, falling inflation, easing interest rate policies, and risks under control. However, any deviation from these factors could create a fragile foundation that might lead to sharp corrections in the markets.
Berkshire Hathaway's total fixed-income investments reached $17.66 billion in the first quarter. The results showed mixed signals from Omaha ahead of Berkshire's annual meeting.
